There is an alternative to capped drawdown and annuities say My Pension Expert

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• 91% of clients worried about their fall in income following drawdown reviews • Strategies to manage the income falls include exiting using investment-linked annuities and topping up the drawdown plan using other savings. • Other retirement income concerns include preserving income, falling annuity rates and inflation

My Pension Expert
Consideration needs to be given to these third way investments, and while annuities and capped drawdown have their place, for some people they offer a very good solution

Retirement providers MGM Advantage have revealed that the main concern for retired clients, who use income drawdown, was the drop in their income following recent reviews.

While the drop in income is worrying, there are tactics that can be taken to control these falls. These include exiting drawdown and using investment-linked annuities or adding more to the drawdown plan from alternative savings. Despite the measures that can be taken, 19% of advisors still said their clients were content to accept the drop in income in case the markets improve in the future.

The main priority for the retired is to maintain their income, with 52% suggesting this is priority. Falling annuity rates are also worrying 49% of clients, while the background of inflation corroding spending power is of great significance for 38% of people.

Andrew Tully, Pensions Technical Director at MGM Advantage has commented that society is at the centre of a ‘perfect retirement storm, which shows no signs of abating’. He believes that the economic downturn has taken its toll on annuity and interest rates and inflation, resulting in retirees questioning what more damage could be done. Fundamentally, in order to attempt to counteract the dwindling economy, advisors are taking the clients’ concern on board and are beginning to recommend the use of investment-linked annuities.

Scott Mullen of My Pension Expert the annuity specialists said “Consideration needs to be given to these third way investments, and while annuities and capped drawdown have their place, for some people they offer a very good solution. Where the maximum income possible is required, the Flexible Income Annuity offered by MGM advantage can tick a lot of boxes as it will allow an income rate of 120%, offers investment growth potential to stave off the effect of inflation and takes into account the retirees health. Of course this type of plans should only be sought following Independent Financial Advice to ensure suitability.”

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Samantha Green
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